In short: Mortgage rates are now hovering near recent lows, which is welcome news for shoppers who have been waiting for some relief. That doesn’t suddenly make this market affordable for everyone, but it does crack open doors that had firmly shut when rates peaked.

Subdued CPI report subdues rates

Treasury yields fell over the week, pulling mortgage rates down with them. Recent levels rival the dip seen in September 2024 and bring rates close to where they stood in September 2022, though at that time rates were rising rapidly rather than easing.

A softer-than-expected Consumer Price Index (CPI) report released February 13 contributed to the downward pressure. While inflation remains above the Federal Reserve’s 2% target, which limits how much the Fed can cut its benchmark rate, incremental progress shifts the balance of risks away from overheating inflation and toward a cooling labor market.

That said, rates could retrace somewhat. Minutes from the January Fed meeting, released February 18, indicated that some members felt “additional policy easing may not be warranted” until inflation is clearly back on track. 

Nonetheless, mortgage rates have fallen to a recent low, unlocking additional buying power as the home shopping season begins.

What’s the impact on housing? 

Zillow forecasts mortgage rates will continue a gradual descent toward 6% by the end of 2026, assuming current economic conditions hold. Policy shocks could sway that forecast.

Though Zillow forecasts only very moderate declines in borrowing costs, 2026 is shaping up as the year for small wins. Affordability is set to gradually improve as modest rises in home values mean that incomes can catch up, opening up a wider pool of shoppers able to buy a home. Early signs of thawing emerged in January, with increases in new listings and pending sales compared with the prior month, though activity remained subdued relative to last year due in part to winter storms. Activity should warm up with the weather, as households that were sidelined in 2025, either from economic uncertainty or challenged affordability, try again this home shopping season.